Did you know that in the eyes of most creditors there really is no difference between a 740 credit score and a 800 credit score? It’s a myth that your credit score needs to be in the upper 700’s or even 800’s. You will find that this ideology is nothing more than an ego booster.

Now, I am not saying there is anything wrong with a 780 credit score or even an 800 credit score. We are getting pounded currently by experts that a credit score is crucial to the best rates and terms. While this is very true, there comes a point where we can go over board with this matter.

Most of my investors or even my bank starts dinging your interest rate when your score drops below a 740. Let’s assume you have a 780 credit score and another guy has a 740 credit score. Who do you think will get the best rates? With most lenders it does not matter…. Your risk is the same…

I don’t believe there is anything wrong with shooting for the stars, but just remember that your rates and terms will not be any better.

If you have discovered that your credit score is 740 or above, you have arrived. This means that you are considered part of the elite in the eyes of most lenders. Most creditors will not have an issue lending you money as long as you qualify.

FICO recently reported that 25.5% of consumers have credit scores 599 or below, that is roughly 43 million people. If you have found yourself in this group of Americans, then its time to get to work. If you are part of the elite, don’t sweat it, just maintain your good credit standing by practicing the following.

Maintain good credit score practices with the following:

1. Making your payments on time.

2. Don’t charge up your credit cards.

3. Don’t co-sign for loans.

4. Don’t close out good credit on your credit report.

5. Don’t apply for too much credit at once.

Author: Mike Clover

CreditScoreQuick.com

This is a very common myth and misunderstanding.  The credit reporting agencies, Equifax, Experian and TransUnion, do not own FICO or the FICO scoring models.  They instead have an agreement with FICO, formerly Fair Isaac, to calculate credit scores using FICO’s scoring software and then sell and deliver them to lenders and whomever else has purchased them.  The perception is that because the credit bureaus deliver the scores to lender that they somehow own the FICO system.  FICO is actually a publicly traded company traded under the stock symbol FICO.  So, technically, you, me, and anyone else who owns FICO stock own a piece of company and the assets of the company, such as the scoring system.

The credit bureaus only wish they owned the FICO score.  If they owned it then they wouldn’t have to pay FICO a royalty and they wouldn’t have had to credit VantageScore as an effort to replace the FICO scoring system.

John Ulzheimer is the President of Consumer Education for Credit.com and owner of  2StepCredit.com.  He is an expert on credit reporting, credit scoring, credit score ratings, and identity theft. Formerly of FICO and Equifax, John is the only recognized credit expert who actually comes from the credit industry.  He is a weekly guest on FOX’s The Willis Report and is the credit blogger for the New York Times and Mint.com.  He has served as a credit expert witness in more than 65 cases and has been qualified to testify in both Federal and State court on the topic of consumer credit.

Debt collection companies are not above the law

The company Allied one of the largest debt collectors in the nation will pay $1.75 million to the FTC for making multiple phone calls to the wrong person and to collect the wrong amount. This is the second largest civil penalty obtained by the FTC from a debt collector.

This goes to show you that no one is above and beyond the Fair Debt Collection Practices Act or Federal Trade Commission Act. Which both were violated in this law suit. David Vladeck, the director of the FTC’s Bureau of Consumer Protection stated today that debt collectors had better make sure their information is correct, or they might end up paying big fines. He stated that there is no excuse for trying to collect a debt from someone if you can’t verify they actually owe the debt.

According the FTC, Allied continued collection efforts, between 2006 & 2008, even after the consumer told the company they did not owe the debt. They proceeded with this process without verifying the accuracy of the disputed information. The company was accused of making improper harassing phone calls to the consumers, using abusive language, calling multiple times a day, and sometimes hanging up when the calls were answered. The company also allegedly made calls to third parties without the consumers consent or court permission, and threatened court action that it did not attend to take.

The FTC sets some rules for Allied. The decree states the following.

(1) A consumer disputes that he or she owes the debt or the amount of the debt, or (2) a reasonable person would consider the information on which allied is relying to collect the debt implausible, facially unreliable, or missing essential information. With either circumstance the debt collector must either close the account and stop collection efforts or suspend collection until they have conducted a reasonable investigation and verified that the information about the debt is correct and complete. If allied cannot produce this information the company cannot sell the debt to any other business other than from the client that which the debt was obtained.

The consent decree also bars Allied from:

- Violating the Fair Debt Collection Act

- Communicating with third parties about a consumers debt without the consumers permission or court consent

- Using obscene or profane language or harassing consumers with repeated phone calls

- Making claims that a debt is owed or about the amount without reasonable basis

- Asking third party for a consumer’s location more than once without that third party’s consent or a reasonable belief that the persons earlier response was incomplete or wrong and that that person has the correct location information.

- Making false statements to collect a debt or obtain information about a consumer

- Making any other false or misleading statement in collecting a debt, including threatening action it does not intend to take

- Making fales statements to collect a debt or obtain information about a consumer

Source: http://www.ftc.gov/opa/2010/10/alliedinterstate.shtm

Author: Mike Clover

CreditScoreQuick.com

Q:

I recently paid off and closed two loans that I had. I was told that it may take up to 90 days for it to show on my credit. I am now looking to finance a car and they showed as still open. Is there a way to speed up the process so that it will show as paid or closed sooner? Any info is appreciated.

Thank you.

Christopher

A:

When paying off debt, you are at the mercy of the creditor to report that information to the credit bureaus. Typically this process should only take 30 days to get that information updated with all 3 credit bureaus. There are some other options. You can get this information in writing from the creditors and send it certified mail or update it via online. There is a online solution with each bureau, that allows you to let them know there is a change with your information. Another option is to get with a mortgage broker that you have a relationship with and do what is called a rapid update. There is  a fee involved with this, but it may be worth it with your situation. The mortgage broker or bank will require that you have documentation supporting the update required. This process usually takes 5 business days to force the bureaus to do an update on your behalf. You are welcome to use our online resource with the credit bureaus.

Mike Clover

CreditScoreQuick.com

What do you do when you notice a charge on your credit card statement that is incorrect?  With so many reports of scams and rip-offs related to credit cards, consumers are justified in their concern about bogus charges on their card statements.   Above all, don’t panic … if it is in fact a mistake, there are a few things that you can do right away to quickly make it right.

Here are 4 steps you can take to help you deal with and quickly fix any error on your credit card billing statement:

Confirming the Mistake

If you are going to dispute a charge, you need to do your homework and confirm that it’s an actual mistake before you start throwing stones at your card issuer.  Looking at the statement, identify the errors and write down the name of the merchant and the amount in question.  If the merchant name for the charge looks unfamiliar, don’t automatically assume that the charge was a mistake.  If the mistake was an incorrect amount charged to the card though, look for the receipt that will prove what the actual charge should be.

Call the Retailer/Merchant

Your credit card statement provides contact information to identify the merchants who accepted each credit card payment from you.  Contact the merchant and inquire about the specific charge in question.  If the error is an incorrect amount that was billed to you, you can work directly with the merchant to satisfy the dispute, simply by providing the merchant with a copy of the receipt.  Request the amount be corrected and ask the merchant to provide you with the change made in writing. Most merchants will be happy to clear up the mistake immediately and the matter should be resolved fairly quickly.

Contact the Credit Card Provider

If things do not work out with the merchant or you suspect foul play on the charge to your card, waste no time in contacting the credit card issuer. As a consumer you have 60 days to notify the card company of any disputed charge. Initially, you should contact the company by phone to report the incident, especially if you suspect fraud.  Be sure to put your dispute in writing though and mail it via Certified/Return Receipt Requested to ensure the correspondence of your disputed charge is on the record. Include in the letter your contact information, account information, date of the charges, and a description of the charges being disputed.  Include a copy of your billing statement with the disputed charge highlighted for easier identification.

Taking Further Action

If you are unable to resolve your dispute satisfactorily through either the merchant or the credit card company, you need to review your rights under the Fair Credit Billing Act, or FCBA. As a consumer, you have certain rights when it comes to unauthorized charges and charge disputes including the consumer’s right to not have to pay the amount being disputed during the investigation. No interest can be accrued during the investigation on the specific charge either. In the event the dispute is denied, the interest can be added back on the disputed amount retroactively.

Guest Post: CreditCardAssist.com

I get this question almost daily.  Which is the best rewards card to sign up for?  Aren’t they all the same?  Miles, points, cash back, what’s the best option?  The truth is rewards cards are not all the same and there are some that are probably better for you than others.

It’s very important to keep in mind that credit cards have a purpose.  The purpose is to make the credit card issuer money.  However that revenue is generated, it doesn’t really matter.  Whether it’s fees, interest, interchange (the merchant’s fee for accepting the card), or through the sale of enhancement products revenue is revenue.

All rewards cards also serve the same purpose.  That purpose is to generate revenue for the issuer but in this case the issuer is targeting you with a partner.  That partner might be an airline, a sports team, a charity or a school.  Regardless of which, it’s someone or some organization that is appealing to you.  And since most consumers are vain, they’d rather walk around with a card with a college logo stamped on the front than one with nothing on the front.

I believe, and I might be unique in my opinion, that cash back cards are the best type of rewards card.  Why?  It’s simple, cash has no black out dates.  And, the cash back programs are really easy to understand, which is not something you can say about the air miles programs.  If you spend a dollar you earn some percentage of that dollar as cash.  Normally the percentage ranges between 1% and 5%, depending on the issuer.

Here’s another reason I like cash better than miles, the value is better understood by the consumer.  Follow me…it takes roughly 25,000 air miles to redeem for a free round trip domestic coach ticket.  And, that’s if you’re lucky enough to choose a flight that actually has seats available for purchase with that minimum mile price tag.  To earn 25,000 miles you’ll likely have to spend $25,000 because most of the programs reward you with a mile per dollar spent.  Now, I can buy a round trip ticket in first class to anywhere on the globe for about 1/2 that price.  Point being, you better not buy stuff simply to earn the ticket.

Go to any of the airline websites and you’ll see that you can buy a round trip coach seat for well under $500 from any two destinations in the continental United States.  So using the airline points to buy a round trip ticket from Atlanta to New York just does not make sense, as an example.  In fact, there aren’t many examples that DO make sense.

So the next time you’re in the market for a rewards card keep a few things in mind please…

1.  If you’re paying the bills then it might be a better idea to get a cash back card rather than an airline points card

2.  If you don’t understand the program terms then don’t sign up for the card

3.  If you revolve a balance from one month to the next and pay interest, you’re likely to pay more for the reward than it’s worth.

John Ulzheimer is the President of Consumer Education for Credit.com and owner of  2StepCredit.com.  He is an expert on credit reporting, credit scoring, credit score ratings, and identity theft. Formerly of FICO and Equifax, John is the only recognized credit expert who actually comes from the credit industry.  He is a weekly guest on FOX’s The Willis Report and is the credit blogger for the New York Times and Mint.com.  He has served as a credit expert witness in more than 65 cases and has been qualified to testify in both Federal and State court on the topic of consumer credit.

Author: Jesse
SubPrimeBlogger.com

Buying a home requires upfront leg work…..

In the current market you need more than a good credit score. You must qualify with provable income. Even if you are a W2 employee, banks will request your last two years tax returns.

During previous years all you needed to qualify for a loan was 2 years W2’s and 30 days paycheck stubs. Now banks are asking for 2 years tax returns to determine your income, even if you have a guaranteed salary. After all if you are telling the IRS you make less and are taking more than the standard deduction, how can you claim you make what you do via W2’s and paycheck stubs?

What banks are looking for on the tax return that will ding your income, are write-offs such as unreimbursed employee expenses. When these types of write-offs are on your tax return, get ready to have your income reduced.

It’s kind of like that old saying, “you can’t have your cake and eat it, too…”

These are the type of issues that are taking place even with borrowers that have 800 fico scores and are putting down 20%.

So when you get ready to buy a home make sure you get pre-approved. You may not qualify for the home you thought you could afford. Or let me rephrase that. You don’t have provable income to get the home you actually want.

Provable income affects your (DTI) debt to income ratio. This will be affected by what banks are allowed to use to calculate your income. So a small detail of writing off 20,000 in expenses could mean the difference of a 30% DTI or a 40% DTI. The lower your debt to income the better chances of qualifying for a home loan.

Before jumping in a car with a Realtor, do a little leg work to make sure you actually qualify for the price range you are looking in. To get a mortgage these days takes more than a good credit score and a pulse.

Author: Mike Clover

CreditScoreQuick.com